Platform Thinking: How to get startup ideas

Sangeet Paul Choudary | February 4, 2013 | 2,117 Comments

How does one find new startup ideas?

Every business is built around solving a customer pain. Solving a customer pain creates value which in turn, if successfully harnessed, can be monetized. Platforms, in particular, connect demand and supply to solve customer pain on both sides.

Platform Thinking and Startup Ideas

One of the patterns for new startup ideas, that I often see in platforms, is the following:

Match an unmonetized/unvalued surplus with an unsatisfied scarcity.

This requires a unique combination of two factors:

1) Unmonetized/unvalued surplus: This implies that there is some form of surplus which cannot be monetized at the moment. However, given the opportunity, the owners would want to monetize it. A similar dynamic exists for surplus that isn’t currently valued by an audience/market (e.g. a person’s creativity).

2) Unsatisfied scarcity: The second important factor is scarcity. More specifically, scarcity that isn’t currently optimally satisfied. There might be solutions to the scarcity but none of them are optimal enough.

A good balance of both factors is required. If the scarcity is already being addressed, there may not be any need for a new solution. If the surplus is already monetized, it may be difficult for the producer to engage with more means of monetizing the surplus.

Hence, both aspects are equally important for the platform to exist. Also, depending on which of the two aspects is stronger, the seeding of the platform may start either with tapping the demand or with harnessing the surplus.

At the very outset, let me clarify that this is one of many different patterns for finding new startup ideas. Even among platforms, many different form of patterns exist.

Understanding Surplus and Scarcity

Surplus may exist in various forms. It may be a surplus of time, attention, money, physical commodities. Let’s look at a few examples below:

AirBnB:

A surplus of accommodation in a particular location during a certain time period

MEETS

A scarcity of accommodation in that same location during the same time period.

Amazon Mechanical Turk, TaskRabbit:

A surplus of time to perform certain tasks

MEETS

A scarcity of time to perform those same tasks.

KickStarter, IndieGoGo:

A surplus of investable capital

MEETS

A scarcity of capital

SkillShare:

A surplus of niche skills and talents

MEETS

A scarcity of niche skills

Quora:

A surplus of knowledge on a niche topic

MEETS

A scarcity of knowledge on the same topic

Zilok, Rentoid, Neighborrow:

A surplus of physical items

MEETS

A scarcity of those same physical items

YouTube:

A surplus of niche creativity

MEETS

A scarcity of niche entertainment

This model isn’t limited to online networks alone. Offline spaces also allow this model if you can achieve concentration of supply within a limited physical space. Coworking spaces like The Hub are an example of such a model, matching a surplus of office space with those in need of one.

A final note on platform ideas

For a given idea,

1. Identify the commodity that’s being traded, a target segment where a surplus exists and a segment with a scarcity

Again, surplus and scarcity that are currently not being utilized or satisfied are likely to come on board much faster.

2. Determine degree of overlap between the two target segments to allow the transfer to occur

Since scarcity and surplus need to be matched, there should be a high level of overlap between the two sides. Hence, it often helps to start by targeting a micro-market which provides a good concentration of demand and supply.

3. Determine factors based on which the two sides will be matched

The matching needs to be determined based on certain factors to ensure that the scarcity and surplus successfully satisfy each other. Quora determines matches through an “Ask To Answer” feature which surfaces the users most likely to have an answer to a certain question based on their history of answers on that topic. AirBnB matches accommodation surplus with scarcity based on time (exact dates) and location (exact place).

In summary,

Match an unmonetized surplus with an unsatisfied scarcity.